Tony_S
Member
That's what the recession means. It means the market needs to correct itself, and that's what the recession does. It's not pleasant, but it's necessary.
This isn't the business cycle at work, although some problems can be related to the easy credit policies of FED during the 90s.
Derivatives are speculation, paper stacked on paper, etc. Some of these exotic instruments were repackaged and resold as well. One cannot liquidate illiquid assets.
Of course this is the business cycle at work. The Fed's low interest rates are what caused this recession.
The FED is responsible for the bubble, I agree. However, the derivatives bubble, at least in the US, was caused by the repeal of Glass-Steagall Act.